ELLIOTT WAVE ANALYSIS - Latest Market Commentary
30th April 2016 - The latest Q1 GDP estimates came through weaker than expected, building upon last week’s Federal Reserve’s dovish remarks for the U.S. economy. The bullish mood of the last few months is definitely weakening with the S&P heading lower during the latter stages of last week. We already know that five wave patterns within February’s advance### for the financial sector indices are in a terminal stage of completion, highlighting the probability that counter-trend declines have already begun. But our preferential counts for the S&P are more complex describing this current sell-off as simply a 4th wave correction. Time will tell if this is correct. Downside support at ‘4th wave preceding degree’ is still lower than current levels towards 2026.00+/- so this remains the main test for the coming week. The XLF Financial ETF index defines a more clearly visible five wave pattern completing last week – so this places more emphasis to the downside. The Dow’s recent high at 18167.60 is currently labelled a 3rd wave although we are open to a relabelling that already ends its five wave upswing from the February low. The Nasdaq 100 has been hit hardest with Apple Inc.’s continued decline so this seems more vulnerable to additional… Read full summary in our latest report!
30th April 2016 - Thursday’s first estimate for Q1 U.S. GDP came in weaker than forecasts, at +0.5%, slightly lower than economists’ estimates at +0.7%. This was followed Friday, by the latest inflation figures as depicted in the Federal Reserve’s preferred statistic, the PCE price index. It came through on a year-on-year basis at only +0.8%, far below the central bank’s ###2% per cent target. Both figures had an impact on the US$ dollar which continued its weakness to a new nine-month low with the index at 93.09. This latest weakness in U.S. economic data is coming on the back of Wednesday’s FOMC meeting with comments from the committee that economic activity had slowed and that growth in U.S. household spending had also moderated despite consumer sentiments levels remaining high. The Yen is also gaining strength as the Bank of Japan announced that it was to keep its main monetary policy unchanged. This came as a surprise because earlier comments had suggested more stimulus was on its way. This latest round of US$ dollar weakness is considered… Read full summary in our latest report!
Bonds (Interest Rates)
30th April 2016 - The Federal Reserve kept interest rates unchanged at levels between 0.375% per cent and 0.500% per cent at its latest FOMC meeting, last Wednesday evening. In its following statement, it said that economic activity had slowed and that growth### in U.S. household spending had also moderated despite consumer sentiments levels remaining high. It also highlighted details on the many conflicting signs in the economic data, something the markets chose to focus on in later trading. Early Thursday, the Bank of Japan announced that it was to keep its main monetary policy unchanged. This came as a surprise because earlier comments had suggested more stimulus was on its way. Despite this lack of additional monetary easing, Governor Haruhiko Kuroda pledged to do whatever it takes to boost the country’s low inflation, saying there were no limits to stimulus measures. Weaker PCE inflation figures announced…Read full summary in our latest report!
30th April 2016 - The five wave impulse patterns evident in many commodity advances from the Jan./Feb. lows are approaching important upside targets for completion. Gold’s earlier orthodox five wave completion into the March high is being followed by a correction### in the form of an expanding flat. This allows slightly higher highs prior to a sharp decline to complete the corrective pattern. Silver’s recent outperformance came to a grinding halt last Friday as gold tracked higher. Resistance at 17.94-18.25 is likely to end its five wave upswing from last December. Speculative longs are in extreme overbought territory highlighting silver’s downside risks at current levels. The US$ dollar has extended its declines from last December’s high but is also approaching downside completion. Once it begins to turn higher, we expect to see most commodities begin… Read full summary in our latest report!